Supervalu reports strong earnings, ramps up remodels
EDEN PRAIRIE, Minn. —Despite a lower-than-expected increase in same-store sales—due in part to its pharmacy division—Supervalu recorded strong earnings for its second quarter and said it’s on track to remodel up to 120 stores by the end of the year.
The 2,463-store chain reported sales of $10.2 billion for the quarter that ended Sept. 8 and earnings of $148 million compared with $132 million during the same quarter last year. The strong earnings came in spite of a 0.5 percent jump in same-store sales during the quarter. “We’re not pleased with the identical store sales reported for the quarter,” said Supervalu chief executive officer Jeff Noddle.
He said the nearly-flat sales were the result of a late summer slowdown in customer traffic, underperforming stores that are in need of remodels and an increase in sales of generic drugs at its 877 food and drug combo stores. As usual, Supervalu did not break out pharmacy sales, but Noddle said they were impacted by “deflationary pressure due to the increased role of generic drugs.”
Overall, Noddle predicted conditions would improve each month as Supervalu continues remodels across all of its banners, including the 1,100 stores it acquired in its 2006 purchase of Albertsons. So far this year, Supervalu has completed 100 major remodels and 35 minor remodels to its Premium Fresh & Healthy format and expects to complete up to 120 remodels by the end of its fiscal year next February, about 10 more than it originally planned.
“From day one, we said this was going to be a three-year effort, and we’re already about halfway through it,” said Noddle, noting that remodeled stores have reported a consistent increase in same-store sales.
Supervalu also reported some major developments in October. On Oct. 24, it appointed Sue Klug as the president of its Southern California division. She replaced Pete Van Helden, who resumed the sole role as executive vice president of retail West after holding both positions since May 2006.
Klug, who most recently served as senior vice president of sales and marketing for retail West, now oversees operation of Supervalu’s Albertsons stores in the region. During her 29-year career, Klug initiated a number of key programs, including the creation of “3’s a Crowd” at Albertsons and the relaunch of the Lucky store banner in California.